HP to Layoff 15,000 Employees

William Robinson writes "ZDNet reports that HP is planning to layoff 15000 employees. IT, sales and services will be among the areas particularly hit, although the sweeping cuts will be felt throughout the company, according to a close source to the company." From the article: "HP is expected to announce the layoffs as early as Monday, but employees are not expected to be immediately notified of their status, the source said, noting such a practice is common in corporate America. More high-level discussions on the layoffs will occur late next week and employees may get a greater sense of their specific status sometime thereafter."

Comments

Severance

[superpulpsicle]

Severance expenses averaged $78,000 per person

I guess this averages out with management's planned $10 million per executive along with the $1000 normal employee package.

Re:Severance

[dspisak]

Sure, CEOs should make more then the average workers at a corporation but exactly at what gross multiple of average salary wages is too much for a CEO to be making?

It has been shown that european CEOs salrays are often a much smaller multiple of median workers salaries I recall. BusinessWeek, which has tracked executive pay for half a century, figures that CEOs of the country's largest corporations last year (2003) were paid about 300 times the average factory worker. In Europe, in contrast, chief executive pay tops out at 30 times the average worker. Americans might defend this disparity by declaring that U.S. companies are better run, but are these companies more than 10 times better run?

Additionally according to Kevin J. Murphy, E. Morgan Stanley Chair in Business Administration, Marshall School of Business, University of Southern California: 'Since 1970, cash compensation for CEOs has gone from 25 times the pay of the average worker to about 90 times the pay of the average worker. Total compensation, including stock options measured at grant value, went from just over 25 times average worker pay in 1970 to a peak of almost 600 times average worker pay in 2000, and has now (2004) dropped down to about 360 times average worker pay.'

I dont know about you but I have to say I am sure that being a CEO is a hard job and requires a variety of skills and risks to be taken, but it is not such a specialized set of skills that warrants 600:1 pay disparity I think. Yes, capitalism exists to reward those who take the greatest risk but if you are a CEO making multi-millions a year regardless of company performance all one needs to do is survive for a few years and then then bail out on your disgustingly obscene Golden Parachute(tm) and be set for life while the company you leave lay in ruins and the common worker gets the shaft.

At least thats how I see it in the light of what that bitch Carly did to Hewlett-Packard (oh, and dont call it HP, then your parodying Carly's attempt to make everyone forget how Walter Hewlett spoke out against the merger between Companq and Hewlett-Packard http://news.com.com/2100-1001-858499.html?legacy=c net )

Re:Severance

[patio11]

$21 million over 15,000 employees = $1400 of the average severance cost was as a direct result of her package. Not an insignificant number, also not a huge number compared to $78,000. Note that expenses associated with laying off an employee aren't limited to severance pay, though (just like costs associated with hiring aren't limited to salary).

In related news...

[MrDyrden]

HP to hire 15,000 new outsourced workers in Bangalore, India

Remember folks, outsourcing is good for the economy!

No Management Cuts

[ElNonoMasa]

HP's management team and business units will remain in their current form, with the restructuring mainly focusing on the workforce...

Makes you wonder what management team let it get non-competitive in the first place, and why are they not affected by the cuts?

30% Work Force Reduction

[premii]

Thy are no planning, its already been started month ago, my team got laid off couple weeks ago. and before us, atleast 15-20 people got laid off out of around 200 people at Dearborn, MI location. and thy are planning to reduce atleast 30% of work force, and off shoring to Toronto, Malasiya and India, and replacing with cheap contract.

IANACEO

[Comatose51]

I'm not a CEO, but: "HP's management team and business units will remain in their current form, with the restructuring mainly focusing on the workforce, said the source, who declined to further delve into the effect of the layoffs in each division. The source noted none of the existing executives on the management team will be re-assigned to new posts, but members may be added to the team."

That doesn't make a lot of sense to me. So now you have 15,000 less people to lead/manage but you still have the same number of executives and managers. That seems to create a very top heavy structure and those tend to fall over both in the management world and the engineering world.

The more cynical side of me tells me that the execs and managers have more pull so would put up more of a fight if laid off. I'm sure the top level execs know the middle level ones at personal level so found it harder to laid them off. Instead, the little peons on the bottom who they barely know or care about can fend for themselves.

HP Services has roughly 65,000 employees, but analysts are predicting HP will lop off only about 8 percent here because the company is working on edging out IBM Global Services, EDS and Accenture for corporate contracts. "We estimate that HP has roughly 20,000 salespeople, with the majority in (enterprise server group) and Services, and that CEO Hurd is likely to look to streamline the organization, moving away from HP's current 'matrixed' selling organization to focus on more direct accountability," Sacconaghi said.

I really hate the word "accountability" when used in isolation. From my experience, if accountability is the only method being used to solve problems, people start playing politics and the blame game. Bueraucracy goes through the roof and everything has to be documented in case the problem doesn't get solved. You end up spending more time covering your ass than solving the problem. You also end up taking a toll on teamwork.

It seems to me that their current strategy is to lower costs so they can lower their margins to compete. Not a bad plan but there are other avenues. I know at my company, we're more than willing to pay more for better service and reliability. The initial contract cost isn't the only factor. We have to think about the cost of downtime.

Noncritical research and development (R&D) could also be impacted, analysts suggest. HP's R&D spending is nearly $1 billion higher than all of its relevant competitors combined, according to an independent benchmarking analysis done by Sacconaghi's firm. The comparison was designed to mirror the one that Hurd has professed as his method for bringing costs back into line. "We suspect that Hurd might be able to lower HP's annual $3.5 billion in R&D by $250 (million)-$500 million through the elimination of non-core projects, Sacconaghi said. So they're going to gut the thing that made HP great in the first place. I don't know what they consider non-critical R&D but a lot of innovations aren't obviously useful at first. Didn't a division of HP invent the optical mouse? I wonder if that was considered critical at the time.

Again, I'm not a CEO. I'm all for making an organization more efficient but I wonder if they're making the right cuts. It's sad to see the "Grey Lady of the Silicon Valley", the engineers' corporation get hacked to pieces.

Agilent

[geekee]

"Hewlett and Packard would be astonished at what their company is doing today."

The company Hewlett and Packard founded is now called Agilent. What HP does now has nothing to do with what they did originally.